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Multi-level Marketing Industry Introduction

Multi-level Marketing Industry Introduction
Zhongyin Law Firm (Taiwan) / Charlotte S.H. Wu Attorney-at-law, Partner  

Multi-level marketing (MLM or Multi-level sales), sometimes referred to as “structure marketing” or “multi-level direct selling” is a crucial form of marketing within the different forms of direct selling. Year after year of operations have proven multi-level marketing to be an effective channel.

An MLM company works by recruiting a distributor, who in turns introduces other distributors to join the company to sell company products and services. Different from the usual single-level marketing, a distributor in an MLM company is not only able to receive bonuses through his or her sale of products or services, but is also able to earn sales commissions from his/her introduced distributors. This feature allows for an MLM company’s rapid development.

Since many distributors rely on personal connections to distribute products and services, the costs of marketing channels are cut and rational use of such distribution method in the long run can contribute to a commodity market. Ever since the legalization of MLM marketing through Taiwan’s Fair Trade Act in 1992, domestic MLM companies have flourished.

Taiwan had an annual turnover of USD $2.98 billion in 2013, placing it that year in the 13th place globally. The same year, Taiwan was the 4th worldwide for per capita direct turnover, reflecting Taiwan’s dense population and distinct interpersonal groups. At the end of 2013, 429 MLM companies had been filed with authorities. At the same time, many overseas MLM companies from China, Northeast, and Southeast Asia were using Taiwan as a platform for their businesses.

The newly official Multi-level Marketing Supervision Act of January 2014 stipulates, among other things, regulations on filing, business execution, rescinding and terminating participant agreements, and inspections, which promotes healthy development for MLM companies in the long run.

Our firm has many years of experience in and a varied understanding of the multi-level marketing and direct marketing industries, from careful observation of the interaction between MLM companies and Distributors to staying up-to-date on mergers and acquisitions specific to MLM companies. Our legal advice and services guarantee to efficiently and effectively assist international MLM companies entering into one of Asia’s most opportunity-rich countries.

Foreign company set-up preparation in Taiwan
  • Analysis of and comparison between domestic and overseas MLM market
  • Analysis of and comparison between domestic and overseas MLM regulations
  • Analysis of, comparison between, and suggestions for domestic and overseas Compensation Plans
  •  Product Filing Assessment
  • Office location
  • Recruitment
  • Provision and setup of software and assistance with business execution
  • Outsourcing OEM manufacturers

Investment Application and Company Set-Up
  • Investment Application
  • Company set-up
  • Providing Company registration address
  • Assistance with I.D. Registration of company’s responsible persons
  • Assistance with ARC application for company’s responsible persons

MLM filing, preparation of materials, and related assistance
  • Drafting of the Business Manual
  • Preparing the Participant Agreement
  • Product Registration and Inspection Application
  • Preparing and Reviewing Product Label Content
  • Product Filing
  • Product ads and brochures
  • Applying for cosmetics patents
  • Handling of Fair Trade Commission and Ministry of Health and Welfare On-site Inspections
  • Providing pre-investigation documents and investigation process summaries to our annual legal services clients
  • Updates on relevant laws and regulations
  • Explaining and analyzing import regulations and practices

MLM Company Acquisition and Breakup
  • Legal study and analysis on MLM company acquisition and breakup 
  • Research on MLM companies looking to sell assets

MLM Industry Innovations

MLM dispute litigation and related dispute resolution/mediation
  • MLM Company disputes with Distributors
  • Disputes between distribution lines
  • Issues with returns and bonuses